As computers, smartphones and other internet-enabled devices continue to proliferate in our lives, cybersecurity becomes increasingly important to defend ourselves against malicious attacks. For investors, this is a fascinating realm of innovation and advancement, offering numerous opportunities for portfolio diversification. In this industry report, we outline the broad cybersecurity market in 2024, complete with the latest trends, key players, rising stars, risks and opportunities for early-stage investors.
Market Overview: cybersecurity
The global cybersecurity market is experiencing rapid growth. In 2022, it was valued at USD 202.72 billion. This rose to USD 222.66 billion in 2023, and the compound annual growth rate (CAGR) is projected at 12.3% between 2023 and 2030.
The market is divided into multiple segments: application, type, and industry. By application, cybersecurity can be used for purposes as wide as IT and telecom, retail and healthcare. By type, the categories include device security, endpoint security and network security.
The industries of cybersecurity are truly vast given the spread of cloud computing across most verticals. However, specific industries are more vulnerable to attacks. These include manufacturing, healthcare, financial services, and energy and utilities.
Key trends
There has been a notable rise in the number of e-commerce platforms in recent years. This was fuelled by the COVID-19 pandemic, which forced a lot of consumer behaviour away from high street shops and onto digital stores. Naturally, these platforms have attracted the attention of cybercriminals who wish to target company and user data (e.g. banking details).
The proliferation of smartphones has also been a contributing factor to increased demand for cybersecurity. Today, we live in a “mobile-first” world which cybercriminals are also trying to exploit. One study identifies four layers of mobile threats: user behaviour (e.g. email compromise), app-based (malware), device-based (loss/theft) and network-based (rogue WiFi).
A third trend fuelling cybersecurity demand is the increasing adoption of the Internet of Things (IoT). Increasingly, our devices and appliances “talk” to each other. A smart home, for example, might feature lighting and heating that can be controlled remotely by phone. Whilst highly convenient, this IoT system can create more “entry points” for cyberattacks. For instance, an attacker could gain control of a washing machine in a smart home and use it to unlock the front door. Here, cybersecurity innovations can provide the necessary countermeasures.
Key players and new entrants
Given the wide range of applications, types and industries in cybersecurity, it is difficult to accurately define the precise “boundaries” of the market, and its key players. By network security, leading providers will include familiar names such as McAfee (Intel) and Fortinet. Within specific verticals, however, the key players can shift. For example, in the medical device security segment, leading providers include Asimily, Armis Cendrix and AirShield.
This wide landscape is ideal for early-stage investors. It creates ample space for startups to arrive with innovative solutions for niche customer segments. HiddenApp, for instance, is a London-based cybersecurity provider which focuses on mobile fleet security management and device recovery. It uses geolocation tracking and geofencing to help customers remotely lock (and even wipe) their devices if they go missing.
Zamna is a cybersecurity company which focuses specifically on using artificial intelligence (AI) and machine learning to streamline passenger check-in. Founded in 2016 in London, this early-stage business has attracted investment from Seedcamp, Oxford Capital Partners and others to spearhead its GDPR-compliant identity platform.
A third case study of a rising star is CheckRecipient. This UK-based company concentrates on preventing erroneous messages from being sent, such as sensitive emails mistakenly going to the wrong people. Using its AI-powered solutions, CheckRecipient assists with guarding against BEC, ATO, and impersonation attacks. $2.7m was recently raised from Accel Partners, Winton Ventures, and other investors to fund expansion plans.
Risks & opportunities
The whole cybersecurity market is likely to enjoy considerable tailwinds in the coming years. Global demand for internet-powered devices, cloud computing and the IoT will almost certainly increase the need for protective measures to address their “weak points”.
One rising concern is the rise of AI-powered “deep fakes,” in which fabricated audio, video, and images are used to deceive audiences. This raises the spectre of an increasingly untrustworthy internet and populations that could be manipulated by malicious content creators. Here, AI could be the solution, not just the problem – using models that can recognise fake images on dimensions that the human eye struggles to detect.
Investors should also consider the role of government spending on cybersecurity demand. Many nations (e.g., India, China, and Western states) are investing heavily in internet security solutions as they expand their growing data collection, storage, and processing efforts. Indeed, data is very much a national security issue for various countries. Cyber Security was identified as a Tier 1 threat in the UK’s 2010 National Security Strategy. This has only been heightened following Russia’s invasion of Ukraine in 2022.
One restraining factor is the outmoded network security solutions, which still pervade numerous verticals. These are simply not sophisticated enough to protect SMEs and other organisations from advanced network, cloud and endpoint attacks. A major problem is a shortage of experts and professionals to assist with addressing these issues. Here, government and investors can step in to help plug the skills gap and take a share of the CAGR for cybersecurity.
Invitation
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